The Production Possibility Curve (PPC) shows the relationship between:
A) The price of goods and services
B) The demand for goods and services
C) The maximum combination of two goods that can be produced with given resources
D) The level of income in an economy
What does a point inside the Production Possibility Curve represent?
A) Efficient use of resources
B) Unemployment or underutilization of resources
C) Maximum production capacity
D) Economic growth
A point on the Production Possibility Curve (PPC) represents:
A) An inefficient use of resources
B) The highest possible production of one good
C) The maximum output combinations of two goods that can be produced
D) A level of scarcity
Which of the following would cause the Production Possibility Curve to shift outward?
A) A decrease in resource availability
B) Technological advancement or resource increase
C) A decrease in demand for goods
D) Increased unemployment
What does a concave-shaped Production Possibility Curve indicate?
A) The opportunity cost is constant
B) The opportunity cost increases as more of one good is produced
C) There is no trade-off between goods
D) Resources are not being used efficiently
If a country is producing at a point inside the PPC, it implies:
A) Efficient resource allocation
B) Full employment of resources
C) Resources are underutilized or misallocated
D) Technological efficiency
Which of the following is true about the Production Possibility Curve (PPC)?
A) The PPC is always a straight line
B) The PPC reflects a trade-off between two goods
C) The PPC slopes upward from left to right
D) The PPC is irrelevant in analyzing economic efficiency
If the production of one good is increased, the opportunity cost of producing the other good:
A) Decreases
B) Remains constant
C) Increases
D) Becomes zero
An outward shift in the Production Possibility Curve is caused by:
A) A decrease in labor force
B) Technological progress or an increase in resources
C) A fall in consumer demand
D) A reduction in the capital stock
What does the slope of the Production Possibility Curve (PPC) represent?
A) The level of scarcity in an economy
B) The trade-off between the two goods being produced
C) The total output of the economy
D) The price of the goods in question
What does a point outside the PPC represent?
A) Unattainable production with current resources and technology
B) Efficient production
C) The maximum output of both goods
D) A feasible production point
If a country is producing at a point on the PPC, it is:
A) Operating inefficiently
B) Utilizing all its available resources efficiently
C) Underemployed
D) Not fully utilizing its resources
The opportunity cost of producing more of one good is illustrated by:
A) The number of resources available
B) The upward slope of the PPC
C) The movement along the PPC
D) The total output of both goods
Which of the following would cause a Production Possibility Curve to shift inward?
A) Technological innovation
B) An increase in resources
C) A natural disaster or loss of resources
D) An improvement in labor productivity
The Production Possibility Curve assumes that:
A) Resources are unlimited
B) Only two goods are being produced
C) Prices are fixed
D) The economy is perfectly competitive
Which of the following factors can cause the Production Possibility Curve to rotate?
A) A change in technology affecting the production of only one good
B) An increase in resources for both goods equally
C) A change in consumer preferences
D) A change in labor force size for only one good
A straight-line PPC indicates that:
A) The opportunity cost is increasing
B) The opportunity cost is constant
C) Resources are not perfectly adaptable to producing both goods
D) Resources are limited in supply
A Production Possibility Curve can be used to analyze:
A) Price fluctuations in the market
B) Efficiency and opportunity cost in resource allocation
C) The overall wealth distribution in society
D) Government fiscal policy
What is represented by a bowed-out PPC?
A) Constant opportunity cost
B) Increasing opportunity cost as production of one good increases
C) Equal production possibilities for all goods
D) No opportunity cost
In the context of the PPC, economic efficiency means:
A) Maximizing the production of one good over another
B) Producing the maximum possible output given resources and technology
C) Distributing wealth equally among all sectors
D) Reducing government intervention in the market
Which of the following would shift the PPC inward?
A) A technological breakthrough
B) An increase in the supply of labor
C) A reduction in available resources
D) A rise in the capital stock
A country is operating at a point inside the PPC. This suggests:
A) The country is producing efficiently
B) There is underemployment or inefficiency in resource use
C) The country has reached its maximum potential output
D) The country is allocating resources optimally
Which of the following changes would lead to a parallel outward shift of the PPC?
A) An increase in technology for producing both goods
B) A change in the relative prices of the goods
C) A loss of resources for one good only
D) A decrease in demand for both goods
In a two-good economy, the opportunity cost of producing more of one good is:
A) The amount of the other good that must be forgone
B) The amount of resources required for production
C) The level of market prices for the goods
D) The cost of importing goods from other countries
The slope of the PPC is steepest when:
A) The opportunity cost of producing the good on the x-axis is low
B) The opportunity cost of producing the good on the y-axis is low
C) The opportunity cost of producing one good in terms of the other is high
D) Both goods are produced in equal quantities
When the economy is operating on the PPC, it is:
A) Operating inefficiently and wasting resources
B) At full capacity with all resources utilized efficiently
C) Not producing enough goods
D) Facing constant opportunity costs
The Production Possibility Curve demonstrates:
A) The trade-offs between two goods and the opportunity costs of choosing one over the other
B) The total national income of a country
C) The market equilibrium for two goods
D) The total amount of available resources in an economy
